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2022 (12) TMI 678 - AT - Income TaxRevision u//s 263 by CIT - writing off of inventory in the form of non-convertible debentures - net realisable value of the debentures as on 31.03.2017 were ascertained as NIL and the un-recoupable cost of inventory i.e. the balance amount of cost of debentures was written off in the profit & loss account - As per CIT debentures were still showing in the DEMAT statement of the assessee, such write off was not correct and ld. AO failed to consider these facts and did not conduct any enquiries or verifications - HELD THAT:- Details were placed before ld. AO who has thoroughly examined and after being satisfied that since M/s. Amtek Auto Ltd. has gone into liquidation and was unable to pay the balance sum of Rs. 4,54,00,000/- to the assessee, accepted the assessee’s claim of write off of the said amount. It is also worth noting that Note no. 2.25 of the audited balance sheet states the said transaction and the writing off of Rs. 4.54 Cr. in the statement of profit & loss account which was held as stock-in-trade by the assessee. During the course of assessment proceedings AO asked the assessee to specifically explain the basis of valuation of the debentures of M/s. Amtek Auto Ltd. to which the company replied on 20.12.2019 furnishing the complete details. Ld. AO after being satisfied with the details and explanations passed the order u/s 143 of the Act drawing no adverse inference in relation to claim of valuation loss arising on writing off of the debentures held as stock-in-trade. We find that the transaction referred in the show cause notice has been examined by ld. AO and one of the view permissible under the law has been taken. Even otherwise it has been stated before the lower authorities and before us that in case the assessee will be able to recover the alleged sum, the same will be offered to tax in the year when it will be received - we find that the assessment order dated 27.12.2019 is neither erroneous nor prejudicial to the interests of the Revenue and thus, ld. PCIT erred in invoking jurisdiction u/s 263 of the Act and therefore, the same deserves to be quashed. Appeal of assessee allowed.
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